Economic Change Under Deng Xiaoping

What economic changes happened under Deng Xiaoping?

There were a number of economic changes which took place under Deng. He believed in approaching the economy with a flexible mentality and changing traditional communist ideas if needed.

What were the aims of Deng Xiaoping's changes?

Deng had 3 main aims:

• ❖ He wanted to modernise China.
• ❖ Deng wanted to open up China to trade with the outside world.
• ❖ Foreign investment was to increase under Deng's leadership.

What changes did Deng Xiaoping make to agriculture?

Deng made 5 changes to the agricultural system:

• ❖ Communes were abolished and replaced with Xiangs (village or town).
• ❖ Each Xiang (village or town) had a quota which it had to meet and supply to the state.
• ❖ The surplus could then be sold for profit by the individual farmers.
• ❖ The new system was known as the 'household responsibility system'. It also permitted farmers to decide which crops to plant, allowing flexibility according to land and weather.
• ❖ The impact was huge and 98% of agricultural land was part of the system. Grain production saw a 144% growth during the years 1978-89. The programme was seen as a huge success.

What changes did Deng Xiaoping make to education?

Deng made 4 key educational reforms as he saw this as vital to the modernisation programme:

• ❖ University entry exams were introduced.
• ❖ Private universities were allowed and encouraged.
• ❖ Chinese students were encouraged to travel to the capitalist West for education.
• ❖ Research programmes and establishments were relaunched, which ended the repression caused by the Cultural Revolution.

What changes did Deng Xiaoping make to industry?

Deng had a mixed approach to industry, keeping some of Mao's policies in place but also introducing others which led to the following 4 developments:

• ❖ State-owned enterprises remained but the freedom to set production targets and make profits was given to employees.
• ❖ He implemented an open-door policy, which encouraged businesses to produce quality goods which could be exported overseas.
• ❖ Special Economic Zones (SEZs) were set up in a number of coastal cities. These were areas where foreign investment was encouraged for both exports and home industries.
• ❖ These policies were a great success, with a 500% increase in export trade by 1990. Manufacturing output also increased by 34% from 1978 to 1989.

What changes did Deng Xiaoping make to privatisation?

Due to the industrial changes, China began moving towards a privatisation model and Deng introduced 2 key changes:

• ❖ Businesses, both in the Special Economic Zones on the coast, and inland, began to make profits.
• ❖ A rural version of the SEZ was the 'Town and Village Enterprise' system, which employed 100 million people by 1990.